Punch up after sales decline rate slows

PUBS operator Punch Taverns boosted its share price after revealing it was on track to meet market forecasts, despite `unhelpful' trading conditions. Shares rose 12 per cent after Punch's tenanted estate arrested the rate of decline seen earlier in the year, with an 11 per cent fall in underlying earnings for the 52 weeks to August 22.

Shares rose 12 per cent after Punch's tenanted estate arrested the rate of decline seen earlier in the year, with an 11 per cent fall in underlying earnings for the 52 weeks to August 22.

This was consistent with the performance seen after the first 40 weeks of the company's financial year.

The group, which has around 8,000 pubs, added that levels of financial support to licensees through rent concessions and product discounts were also `relatively steady' at an average cost of £1.6m per month - still double the level seen a year earlier.

In the managed pubs estate, which includes city centre sites, like-for-like sales were down on the performance in the third quarter, when trading was boosted by better weather and the timing of Easter.

While late June and early July benefited from good summer weather, Punch said the remainder of the summer had been unhelpful to its trading performance.

Analysts calculated that sales in the managed estate were down two per cent in the past 12 weeks, leading to a drop of 0.6 per cent in the half year.

Investec Securities described this as `marginally disappointing', given that it expected a greater impact from Punch's recent changes to menus and strategy.

Punch has been focused on tackling its £4bn debt mountain and recently carried out a £375m fundraising with shareholders in order to prevent it being forced into disposing of core parts of its pub estate.

It said today it had offloaded more than a third of the non-core pubs in its `turnaround division' of more than 1,250, mainly through deals with rivals. A further 450 pubs have been identified which will be transferred to the division.

Punch has suffered a series of blows in recent years, with the smoking ban, rising beer duty, cut-price competition from supermarkets and a plunge in consumer spending all taking their toll.